I am the Managing Director of MarketWatch Centre for Negotiation Ltd., an associate professor at BMI, CBS-SIMI, former chairman of the Centre for Negotiation at Copenhagen Business School and a speaker and consultant. I’ve written 23 books on the topics of negotiation and business communication and contributed to many mainstream and trade news publications such as the Christian Science Monitor, Inside Supply Management, BusinessWeek.com, IndustryWeek.com, and BusinessInsider.com, among others. Throughout my career, I’ve had the privilege of working with world-class organizations such as Discovery Channel, Microsoft, Canon, Novo Nordisk, ThermoFisher, Rolls-Royce, IKEA, various governments, Unicef, SABMiller and PricewaterhouseCoopers. I am adjunct faculty at Thunderbird University. In 2015 I was nominated among the 100 Top Thought Leaders in Trust globally.

Nickeled and Dimed: Can Banks Buy Back Your Loyalty?

Banks can no longer afford to ignore the issue of broken trust and disappearing customer loyalty.

According to a 2012 Edelman Survey, less than half of people around the world (47 percent) trust the banking industry “to do what is right.” The world population trusts the media, energy, pharmaceutical, automotive, technology, and almost every other industrial segment measured more than they trust banks and the financial services industry.

In the current economic climate, depositors are seeking to develop a relationship with a bank whose purpose is to service and support its customers, rather than one completely focused on its profit margin. Consumers want to do business with a bank invested in the local community that provides the tools to help them achieve financial freedom. What would the bank look like that was able to put purpose before profit? How much more loyal would you be to your bank if you honestly felt the institution cared about you as a long-term customer?

More than ever before, it’s in banks’ best interest to keep their customers happy, and technology is one tool they’re using to try to accomplish that goal. For instance, there was a time when your bank statement consisted entirely of a list of transactions and the date they occurred. Now, some online banking websites, such as Bank of America’s, offer a full breakdown of how and where you spend your money, using bar charts and pie graphs so that your spending and saving habits are apparent.

Additionally, many banks have become more active, working to give you ideas to get the most out of your money. American Express Bank’s website Amex Open Forum features an array of small business and personal finance articles. Readers can learn the basics of how to build an investment portfolio, or they can find more general stories on life, business, and professional success.

However, technology alone isn’t enough. The perception still persists that the bank is not your friend. In the wake of unscrupulous lending practices, gluttonous CEO compensation, and hidden banking fees, it’s easy to understand why the majority of people mistrust the institutions where they bank. Consumers understand that banks need to make a profit to be sustainable. But, just like the public backlash against Bank of America’s five dollar monthly debit card fee, customers demand that their bank think beyond its own balance sheet.

The perspective of traditional bank thinking is still very narrow. The industry needs to move away from the “it’s all about me” mentality, toward the spirit of cooperation in order to restore trust, respect, loyalty, and financial stability. Think about it: If you had an experience where you felt truly valued as a customer, wouldn’t you share your good feelings on Facebook and LinkedIn, with your family, and among friends and colleagues? With a consistent effort, banks could create an incredibly positive buzz – something the world hasn’t seen for a long time.

Perhaps Robert F. McDermott, former CEO of the banking and insurance company USAA, understood the idea of banks having a “bigger purpose” better than anyone. In a 1991 Harvard Business Review article titled “Service Comes First,” McDermott put it simply: “In this company, service isn’t a matter of generosity, it’s our daily bread.”

While USAA’s financial services must be offered to the general public, this institution has a particular focus on U.S. military and ex-military members. During the Gulf War, McDermott made sure that he accommodated the needs of his account holders encouraging those sent to the Gulf to downgrade their car insurance if the car was going to sit in the garage while the person was overseas. He also made sure the military personnel knew their insurance would not be canceled because of late payments necessitated by their combat status.

McDermott commented, “In spite of all our efforts to reduce premiums and save our members money, losses were so much below normal that we declared a 25 percent dividend – a rebate – on auto insurance for everyone who served in the Desert Storm combat area during hostilities. So everyone came out ahead.” Doing the right thing is good for business.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.

Comments

The bank wants my loyalty? As a Working Class Shlub here are the things I need to see from a bank:

1) Account Security: Every day I hear tales of woe from coworkers who have their accounts raided. It seems I can’t use my bank account online or even my ATM card without fear of being raided by an external source. Fix that before you offer any other services.

2) Coherent Consistent Customer Service: The people on the phone often gave a totally different answer than my banker at the branch office. More often than not my banker was correct and the phone-service people were way out BEYOND left field. This lead me to make some bad mistakes with my credit and with my checking account. When I pointed this out to my banker, he simply shrugged and said that he had no control over what phone service told me.

3) Low/no/bad credit programs: I maintain my bank account “just in case” because I can’t get another one thanks to my credit score and Check Systems. I have also been pre- declined for every single program, loan, form of credit or card there is. I can’t even begin to boot-strap myself out of debt accumulated from my days of being young and stupid. If the banks offered small or micro-loans to credit-risk people with the express goal of fixing credit issues, I’d go back to using my bank full time.

As it is, these three things not even on the radar at the banks. No matter how they brand themselves they are out to get you any way possible because PROFIT is the sole driving motive.